LETTER OF INTENT
The intent of this letter ("letter") is to summarize the result of recent
discussions between the management of Genetic Diagnostics Inc. ("GDI") and
ActiveCore Technologies, Inc. ("ActiveCore") together (the "Parties") with
respect to ActiveCore's proposal to acquire 5 million common shares of GDI at a
price of USD 2.00 which will represent an investment of approximately 23 percent
of the issued and outstanding shares of GDI. Therefore, the principal purpose of
this letter is to document the terms, in general, under which the transaction
would take place subject to the approval of ActiveCore's board of directors,
GDI's board of directors, approval from any regulatory agency the United States
or Canada and legal documentation in a form satisfactory to both parties.
It is understood by both parties that in preparation of legal agreements that
will give effect to this transaction certain arrangements to maximize the tax
benefit or other benefits to both parties may need to be undertaken. Each of
ActiveCore and GDI will undertake to accommodate each other's requirements to
the fullest extent possible, provided however, that neither company will
knowingly fail to comply with any regulation or statute in either Canada or the
US.
PRINCIPAL TERMS AND CONDITIONS
The principal terms and conditions for the proposed purchase of 5 million common
shares of GDI are as follows:
ActiveCore shall sign a share subscription agreement to acquire 5 million common
shares of GDI for USD 10,000,000, which may be accomplished over the next 180
days subject to certain financing to be arranged.
II LOCK UP:
It is hereby expressly agreed that GDI and any of its shareholders, managers or
advisors will not engage in a process of seeking an alternative investor, whose
investment would be in substitution for the investment provided for in this
letter, during the period to end May 31, 2004.
III ASSUMED CLOSING DATE:
November 11, 2003 - Subscription Agreement
May 31, 2004 (outside date for Escrow Release of funds)
IV CONDITIONS:
The investment in GDI shall be subject to due diligence by ActiveCore - already
completed.
The approval of ActiveCore's board of directors
The approval of GDI's board of directors
Legal documentation satisfactory to both parties' legal counsel
Provision of the most recent two years audited financial statements in
accordance with US GAAP and SEC accounting pronouncements for SEC purposes (to
facilitate SB-2 approval of significant asset acquisition). Note if the SEC does
not approve the SB-2 prior to February 14, 2004, the audited statements for the
period to the end of December 31, 2003, will be required.
GDI will cause an affidavit to be sworn to the effect that no relationship
exists between any member of GDI management, including immediate family, and
Ingeneus Research and its parent organization.
Election of Xxxxx XxxXxxxxx as a director of GDI, with Xxxxx Xxxxxxxx to be an
accepted as his official alternate in case of Xxxxx XxxXxxxxx'x absence, and an
agreement to that consultation will bre held between Xxxxx XxxXxxxxx and the
Chairman of GDI with regard to the appointment of another independent director
who may or may not have a seat on the board of directors currently.
Shares: All shares provided as consideration in this transaction will rank pari
passu with all other common shares of GDI and will have all rights generally
associated with common shares including the right to participate in other fund
raisings. No other classes of common shares exist and none will be created prior
to the investment by ActiveCore.
Confidentiality: ActiveCore and GDI will undertake to use every effort to
maintain the confidential nature of the proposed transaction pending mutual
agreement as to any announcement. ActiveCore further agrees to execute a
confidentiality agreement in a mutually acceptable form prior to being granted
access to GDI's books and records (already completed).
Litigation: To the best of knowledge of ActiveCore and GDI, there is no action,
claim or demand or other proceedings pending or threatened before any court or
other administrative agency, which would materially and adversely affect GDI.
Conduct: An undertaking by GDI that, pending the closing of the transaction
contemplated herein, GDI shall have conducted business only in the ordinary
course and there shall have occurred no material adverse change to GDI's
business activities.
Definitive Documentation: It is understood that consummation of the transaction
contemplated herein will be subject to the preparation, execution and delivery
of a share subscription agreement and such other documentation as may be deemed
appropriate (the "Agreement') by legal and accounting counsel to ActiveCore and
GDI.
Applicable Law: The Agreement to be consummated to give effect to the
transaction herein shall be governed by and construed and interpreted in
accordance with the laws of Alberta and the federal securities laws of the
United States of America. As ActiveCore is a public corporation traded on a
recognized stock market in the United States and is a reporting entity within
the United States of America in case of difference in the regulatory treatment
of financial, securities and accounting matters, the laws and regulations of the
US SEC shall apply.
All notices under this Letter should be sent to:
ActiveCore Technologies, Inc. att: Xxxxx X. XxxXxxxxx
Chairman and CEO
0000 Xxxxxxxxx Xxxx. West
Suite 000
Xxxxxxx, Xxxxxxx X0X 0X0
Genetic Diagnositcs Inc. Mr. Xxxxx Xxxxxxxx
Chairman
00 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Dated this 10th day of November, 2003, at Toronto, Ontario.
EXECUTED:
ActiveCore Technologies Inc.
By: /s/ Xxxxx XxxXxxxxx
--------------------
Xxxxx XxxXxxxxx, Chairman and CEO
Genetics Diagnostic Inc.
By: /s/ Xxxxxx Xxxxxxxx
--------------------
Xxxxxx Xxxxxxxx, Chairman
